SBFC Finance has reaffirmed its commitment to growth, maintaining its guidance of 5-7% quarterly increase in assets under management (AUM), a benchmark it has consistently upheld for over nine quarters. This announcement comes despite facing some headwinds in specific market segments.

Credit Quality and Risk Management

The company reported a 100 basis point increase in bucket one delinquency, primarily attributed to stress in specific geographical areas and smaller ticket segments. As a result, credit costs have risen to 1.10%, with the company projecting an additional increase of 15-20 basis points from current levels.

Mahesh Dayani, Executive Director of SBFC Finance, addressed these challenges, stating that the company had anticipated this increase and remains well-prepared to navigate the situation.

Growth and Performance Metrics

Despite the challenges, SBFC Finance demonstrated robust growth in key areas:

• Assets grew by 7.00% quarter-on-quarter
• Pre-provisioning operating profit increased by 9.00%
• Achieved over ₹800.00 crore in disbursals

Strategic Adjustments

In response to the current market conditions, SBFC Finance is implementing strategic measures:

1. Distribution Optimization: The company plans to curtail 15-20% of its distribution channels. However, it expects the remaining 75-80% to continue driving growth.

2. Strengthened Underwriting: SBFC Finance has enhanced its underwriting process, with 87-88% of customer acquisitions now having credit scores above 700. The company is considering further tightening this to 90%.

Future Outlook

Despite the planned reduction in distribution channels, SBFC Finance maintains an optimistic outlook:

• Expects 20.00% growth in disbursals
• Projects 25.00% growth in AUM, even without expansion

These projections underscore the company's confidence in its core business model and its ability to navigate the current financial landscape effectively.

The management's proactive approach to addressing credit quality concerns while maintaining growth targets reflects SBFC Finance's strategic balance between expansion and risk management in the evolving financial services sector.

SBFC Finance Limited, a prominent non-banking financial company (NBFC), has announced robust financial results for the first quarter. The company reported a significant 28% year-on-year increase in net profit, reaching ₹1,008.92 crore for the quarter ended June 30.

Key Financial Highlights

Asset Quality and Financial Ratios

Other Notable Developments

• The company issued 28,22,073 equity shares to eligible employees under various stock option schemes during the quarter.
• SBFC Finance transferred 409 stressed loan accounts worth ₹250.93 crore to asset reconstruction companies.

Management Commentary

Aseem Dhru, Managing Director & CEO of SBFC Finance Limited, stated, "Our strong performance this quarter reflects the robustness of our business model and the dedication of our team. We continue to focus on maintaining asset quality while driving growth across our key business segments."

Conclusion

SBFC Finance's Q1 results demonstrate its ability to capitalize on market opportunities while maintaining financial prudence. The company showed impressive growth in total income and net profit. However, the slight increase in NPAs suggests a need for vigilance in credit quality management. The strong capital position and improved provision coverage ratio indicate SBFC Finance's preparedness to manage potential risks. As the company moves forward, investors and stakeholders will be keenly watching its strategies for sustainable growth and asset quality management in the evolving financial landscape.